Germany’s Scholz Admits to Blowback From Anti-Russian Sanctions as Food, Energy Prices Skyrocket

Berlin joined its European Union partners and the United States in slapping Russia with more than 2,700 new sanctions over Moscow’s decision on 21 February to recognise the Donbass republics as independent states, and Russia's subsequent military operation in Ukraine.

Western sanctions are hitting “many German citizens hard, and not just at the petrol pump”, and restrictions must remain “proportionate” so that the countries which implemented the sanctions aren't damaged more than Moscow, German Chancellor Olaf Scholz has said.

“Sanctions must not hit European countries harder than the Russian leadership. That is our principle,” Scholz said, speaking at a debate in the Bundestag.

“We have to be very clear: [the crisis in Ukraine] may turn out not be a short-term issue, but a long-term confrontation. And we all have to get through it together. Therefore, Germany’s position on this issue remains unchanged. It’s also a fact that many [EU] member states are highly dependent on imports of oil, gas, coal, even more so than Germany. And no one should be left out in the cold in this regard,” Scholz said, explaining his government’s opposition to a total ban on Russian energy imports, as has been proposed by some EU members.

“We will end dependence [on Russian energy] as quickly as possible. But to do this in one day would plunge our country and the whole of Europe into a recession. Hundreds of thousands of jobs and entire branches of industry would be at risk,” he said.

At the same time, Scholz boasted that Europe and its partners have adopted the “toughest sanctions ever applied against such a large country”. These restrictions, he said, will hinder Russia’s economic development dramatically, with the economy “faltering” and hundreds of foreign companies leaving. “But that’s just the beginning,” he promised, saying sanctions will continue to be tightened.

Scholz’s coalition government reportedly agreed on relief measures aimed to ease biting energy prices for German consumers on Tuesday. The measures are said to include a fuel price discount, an energy allowance and a temporary transport allowance.

German media also reported on “out of control” price rises at major food retailers, with sunflower oil doubling in cost, mineral water, coffee and toilet paper up 10 percent, and dairy products up by five percent.

On Wednesday, the Munich-based Ifo Institute for Economic Research predicted that inflation would reach an average of 6.1 percent in 2022, with growth expected to slow to between 2.2 and 3.1 percent – below the 3.7 percent previously predicted as the country continues to recover from Covid lockdowns. Russia and Ukraine’s status as major exporters of wheat and grain also mean increased food costs, according to the institute. Ifo calculates that German consumers will lose some 6 billion euros in purchasing power by the end of March alone.